Indexes in China Rise after Exports Surge

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
09 Jun, 2010
New York City

Stocks in China gained most in two weeks after a Reuter report indicated a surge in exports and higher than estimated new loans.

[R]5:00 PM Hong Kong, China – Stocks in China gained after a Reuter report said exports have surged 50% from a year earlier. Aoxing Pharmaceutical Company announces completion of $8.05 million bank loan financing. Hebei Steel to raise 16 billion yuan to fund acquisition. Metallurgical Corp of China plans $3.8 billion notes issue.[/R]

Stocks in China gained most in two weeks after a Reuter report indicated a surge in exports and higher than estimated new loans.

The Shanghai Composite Index climbed 2.8% to 2,583.87 while The CSI 300 Index rallied as much as 3.1% to close at 2,782.13. The Hang Seng Index rose 0.7% to close at 19,621.24 paring the earlier loss in the day of 0.5%.

However the government in Hong Kong cautioned home buyers to consider their ability to pay before taking out mortgages, after the third auction of a piece of residential land yesterday fetched them more than the market estimate.

China Investment Corp, a $300 billion sovereign wealth fund, is seeking more funds from the government after mark-to-market losses in May and June till date have totaled 10% of the fund, said the fund’s Executive Vice President, Jesse Wang, in San Francisco yesterday.

“We believe the overall recovery is on track and we still anticipate the S&P 500 will rise to 1,250 before the end of the year,” he said at a conference in San Francisco. The S&P 500 Index has fallen 4.8% this year to 1,062.

HSBC Holdings Plc, which opened its 100th outlet in mainland China, is planning to raise a significant amount with a stock listing in Shanghai, that is more likely in 2011 than this year, said CEO Michael Geoghegan while speaking to reporters in Shanghai today.

China fully opened its banking industry to the world in December 2006, after which many foreign banks including HSBC added outlets there offering yuan-dominated services.

The ensuing strike at Foshan Fengfu Autoparts Co has forced Honda Motor Co to halt production at two of its plant in China, said Yoshiyuki Kuroda, spokesman for Honda in Tokyo today.

Negotiations at the Foshan Fengfu plant are progressing and while the strike is ongoing, the factory has been operating partially since yesterday, said Yutaka Giken’s spokesman Anma today. Hamamatsu-based Yutaka Giken owns 65% of the striking company in Foshan.

Shanghai Movers

Bank of Communications Co., Ltd added 3.7% to 6.38 yuan after the lender said Aoxing Pharmaceutical Company, Inc. announced that Hebei Aoxing, its sole operating subsidiary, has completed a bank loan financing with China Citic Bank and Bank of Communications of China for an aggregate of $8.05 million (or 55 million yuan) in capital.

Hebei Iron and Steel Co., Ltd advanced 3.0% to 4.05 yuan after the steelmaker plans to raise 16.02 billion yuan through a private placement of 3.8 billion shares to fund the acquisition of the entire 100% equity of Hanbao Iron and Steel, reports 163.com, citing a company filing.

Industrial and Commercial Bank of China Limited rose 2.4% to 4.20 yuan after the lender had since the beginning of the year provided a total of 55.01 billion yuan of trade financing to small-scale enterprises as of end April, reports Xinhuanet, citing statistics published by the bank.

Metallurgical Corporation of China Ltd rose 2.0% to 4.08 yuan after the company said late on Tuesday it planned to issue up to 29.3 billion yuan ($3.76 billion) worth of medium-term notes and short-term financing bills to raise capital to replace bank loans.

Shenzhen Airport Co., Ltd advanced 2.4% to 5.93 yuan.

[HK Movers

Aluminum Corporation of China Limited fell 0.1% to HK$6.06.

China Overseas Land & Investment Ltd closed unchanged at HK$14.70 after the developer said Wednesday it is maintaining its property sales target for this year, though property sales across China have fallen because of credit tightening.

TPV Technology Limited fell 0.8% to HK$4.59.